I am NOT an Accountant
Ever since getting married, I have been in charge of filing the income tax forms every year. I could pay to have someone file it, but have learned to do it myself through trial and error. When my husband became active duty again, there was a huge shift in the necessary documents needed. Now that the tax season has started, you may start having questions about filing taxes as a military family. Thankfully, it’s a lot more simple than you may realize!
One of the most important aspects of filing taxes as a military family is reporting health care coverage. The Affordable Care Act, enacted in 2010, requires that all Americans have qualifying health care coverage. This is called minimum essential coverage (MEC). You must have it for the entire year, or pay a penalty for not having the required health care coverage. TRICARE health coverage is considered MEC.
MEC Must Be Documented
Health care coverage through TRICARE is available to military members and their families. Additionally, retirees and their families, Survivor Benefit Plan annuitants, and former spouses who have Tricare coverage under provisions of the 20-20-20 rule.
Here is the list of TRICARE coverage that meets the requirement of minimum essential coverage:
- Prime,
- Standard,
- Tricare for Life,
- Overseas,
- Tricare Young Adult,
- Uniformed Services Family Health Plan, and also
- Tricare Reserve Select,
- Remote, and
- Tricare Retired Reserve.
The Defense Finance and Accounting Service (DFAS) will be issuing 1095 tax forms to Tricare beneficiaries. There are two different forms that will be issued by DFAS:
- IRS Form 1095-B (for Military Retirees, Annuitants and Former Spouses,) or,
- IRS Form 1095-C (for Active Duty Military and Federal Civilian Employees.)
These forms will be available through the online myPay account access system for those who have elected electronic distribution. For those who prefer the mail, these forms will be mailed usually by the end of Jan.
Here’s the interesting thing about those forms. While you must have them available, you don’t have to submit them to the IRS with your income tax return. As long as you had MEC for the entire year accurately reported on either the 1095-B or 1095-C form, then you just need to check the appropriate box on your income tax return.
Now what?
So you have the 1095-B or 1095-C forms. Now what do you do? Depending on the method you file your taxes, reporting your health care coverage is slightly different. Here are three of the common forms and how to find where to find the health care question.
Income Tax Form 1040EZ
If you file the 1040EZ, the health care question is located on line 11 of the form. If your spouse (if applicable) and you were both covered by acceptable Tricare health insurance (as listed above) for the entire 2019 calendar year, then you can check the box and continue. Easy!
Income Tax Form 1040A
The form 1040A form poses the health care question on line 38, on page two of the form. If everyone claimed on this tax form was eligible for acceptable Tricare coverages (as listed above) for the entire 2019 calendar year, then tick the box and move on to the rest of the form.
Please be sure that you understand that you are indicating that every member covered by the tax form has had eligible coverage for the entire year. If you have dependent parents using Tricare Plus who do not have other MEC, or if your spouse and children don’t have Tricare because you have never enrolled them in the Defense Enrollment Eligibility Reporting System (DEERS), then you are dealing with a more complicated situation. Please reach out to your base’s Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional to ensure that you are reporting health care coverage accurately.
Income Tax Form 1040
The forms may get more complicated, but indicating that you have health care coverage doesn’t get any harder. On the Form 1040, health care identification occurs on line 61, on page two. If everyone represented on this tax form was covered for the entire 2019 calendar year, you only need to put a check in the box and continue on with the form.
If you or a family member were not covered by TRICARE the entire calendar year, then you will need to report differently. Please reach out to your base’s Volunteer Income Tax Assistance (VITA) program, an accountant or other tax professional to ensure that you are reporting health care coverage accurately.
Use Resources Available!
As military families, we have amazing and FREE or discounted tax preparation resources available. Do not feel like you have to do this alone. I have reached out for assistance many times over the years, especially when something has changed in our lives. Here are some of my personal favorites.
- Military OneSource: provides free tax preparation and filing services and tax consultations. MilTax is a suite of free tax services for the military, including easy-to-use tax preparation and e-filing software, personalized support from tax consultants, and current information about filing taxes in the military.
- TurboTax: offers discounts on its software for active duty military. Service members with pay grades of E1-E5 can get free federal and state filing with Free Edition or Deluxe or a $5 off discount or more for Premier, Self-Employed, and TurboTax Live federal products. E-6 and above get a $5 off discount or more on all TurboTax federal products. If you’re a USAA member, you can save even more on TurboTax. All USAA members can save up to $20 when filing their federal tax returns with TurboTax.
- Most large military installations worldwide offer service members and their families free income tax filing assistance through the Volunteer Income Tax Assistance (VITA) program sponsored by the IRS. VITA sites use volunteers trained by the IRS to provide assistance with some of the more complicated military-specific tax issues. Contact your local installation for more information about location of tax centers, hours of operation, scheduling appointments, and necessary documentation.
Just Don’t Forget TRICARE
Like I said before, one of the most important aspects of filing taxes as a military family is reporting health care coverage. Since TRICARE health coverage is considered MEC, understanding how to report will be important moving forward. I hope this helps you feel more confident during tax season. And of course, make sure to ask for help!
